Trump’s Speech Was Quiet — And Quietly Radical

President Trump deliver his first address to a joint session of Congress on Tuesday night.

JIM LO SCALZO/AFP/Getty Images

Reviews of President Trump’s first address to Congress on Tuesday night seem to be converging around a single theme: It was Trump at his most subdued. “Trump Softens Tone in Outlining Goals,” read the lead headline on The New York Times homepage Wednesday morning. The Washington Post commented on Trump’s “milder tone”; The Wall Street Journal said the address “turned from the ominous language” of his campaign speeches; Politico went with “Trump tries on normal.”

And they’re right. In tone and style, Trump’s speechwas relatively normal, at least judging it against his earlier efforts. He opened his address by condemning recent threats against Jewish community centers and the shooting last week of two Indian immigrants in Kansas City, something he had been criticized for not doing earlier. He called for unity and cross-party cooperation, and stayed away from attacks on the press or his political opponents. Apart from a few banal ad-libs, he largely stuck to his script.

But beneath the gentler tone, Trump’s speech — a State of the Union address in all but name — was quietly radical. He called for a complete overhaul of U.S. policy on taxes, trade, immigration and health care. He proposed spending billions more on defense and as much as $1 trillion on infrastructure. And he promised a new version of his controversial — and currently stalled — travel ban on visitors from seven majority Muslim countries.

Trump’s speech included few policy details and only one genuine surprise: a call to return to a system that accepts or rejects immigrants based on their skills and education. Most of his other proposals were either standard Republican orthodoxy or were familiar from Trump’s campaign. But proposals don’t have to be new to be dramatic. The policies Trump laid out Tuesday night would change the country and its global relationship in profound ways.

Immigration

“It’s a basic principle that those seeking to enter a country ought to be able to support themselves financially. Yet in America we do not enforce this rule, straining the very public resources that our poorest citizens rely upon. … Switching away from this current system of lower-skilled immigration, and instead adopting a merit-based system, we will have so many more benefits. It will save countless dollars, raise workers’ wages and help struggling families, including immigrant families, enter the middle class.”

Trump dedicated two large sections of his speech to immigration, which was also a signature subject for him during his campaign. Much of what he said was familiar: He accused immigrants of driving down wages (mostly false — immigrants generally improve the economy — though possibly true for some less educated American workers) and driving up crime (false — immigrants commit violent crime at lower rates that U.S.-born citizens), and he promised to increase immigration enforcement and to build a “great, great wall” on the Mexican border.

But Trump also threw in a wild card: a proposal to throw out the current process for legal immigration and replace it with a so-called merit-based system, in which would-be immigrants are selected based on their skills and education. (The current immigration system is based heavily on family ties.) Trump argued the change would save taxpayer money by ensuring that immigrants can support themselves financially, and would raise wages by ensuring that only relatively highly paid immigrants would be admitted to the country. Those claims are somewhat dubious, economically: The U.S. population is aging, and Americans are having fewer children, so immigrants are an important source of workers. And in any case, immigrants are already becoming more educated, and are more likely to have a college degree than native-born Americans.

A merit-based system is hardly unprecedented, however. Canada and Australia, as Trump noted in his speech, use versions of the approach. And the U.S. itself did so until 1965, when President Lyndon B. Johnson signed the Immigration Act, which paved the way for millions of new immigrants over the ensuing decades.

Health care

“Tonight, I am also calling on this Congress to repeal and replace Obamacare with reforms that expand choice, increase access, lower costs and at the same time provide better health care. … The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we are going to do.”

Republicans’ plans to repeal the Affordable Care Act have stalled because coming up with a replacement is so challenging. Trump didn’t answer that question Tuesday night, but he did lay out some core principles, including that patients with pre-existing conditions should be able to get coverage, that the government should use tax credits and health savings accounts to help Americans buy their own insurance and that state governments should have “the resources and flexibility” to provide Medicaid to low-income residents. Vox’s Sarah Kliff says Trump’s principles are basically in line with what House Speaker Paul Ryan and Health and Human Services Secretary Tom Price are already working on, though Trump didn’t add many more details.

But Trump may be promising more than he — or anyone — can deliver. In essence, he pledged to make health care coverage better, more accessible and more affordable. But as my colleague Anna Maria Barry-Jester has written, health care policy in the real world is all about tradeoffs. No plan can accomplish everyone’s goals at once.

Taxes

“Currently, when we ship products out of America, many other countries make us pay very high tariffs and taxes, but when foreign companies ship their products into America, we charge them nothing or almost nothing.”

One of the hottest — and by “hottest” I mean “nerdiest” — debates in Washington lately has been over something known as the border-adjustment tax. (Or, because tax policy wonks just can’t leave boring enough alone, the “destination-based cash flow tax” or #DBCFT.) The proposal is complicated, but in very simplified form, it would change the corporate tax so that it taxes imports but not exports. Ryan is a huge fan of the idea as, unsurprisingly, are many exporters. Many other Republicans are opposed, as are big importers like Wal Mart. (The National Retail Federation has even launched an OxiClean-style ad attacking the idea.) Trump has seemed to waver on the issue, and members of his own team apparently don’t agree on it.

In Tuesday’s speech, Trump seemed to embrace the border tax cautiously, or at least the underlying logic behind it. Proponents of the border tax argue that the current U.S. corporate tax system disadvantages U.S. companies because they face high taxes when they export but their competitors don’t face similar taxes when they import. Trump seems to buy that argument. But as The Wall Street Journal’s Richard Rubin argued on Twitter, Trump stopped short of embracing the border tax as the solution.

What Trump did make clear is that he wants to overhaul the corporate tax system in a major way. Unlike many of Trump’s economic policies, this is an area where he could get a lot of support from economists, especially on the right. U.S. corporate taxes are high and full of loopholes, the worst possible combination as far as most economists are concerned. They would generally prefer taxes to be lower and simpler. But when it comes to tax reform, there is no such thing as “simple.”

Infrastructure

“Another Republican president, Dwight D. Eisenhower, initiated the last truly great national infrastructure program: the building of the interstate highway system. The time has come for a new program of national rebuilding. America has spent approximately $6 trillion in the Middle East, all the while our infrastructure at home is crumbling. With the $6 trillion, we could have rebuilt our country twice, and maybe even three times, if we had people who had the ability to negotiate.”

Infrastructure was the unexpected star of the night. References were sprinkled throughout the speech; at one point he promised new roads, bridges and other projects “gleaming across our very, very beautiful land.” And he proposed “legislation that produces a $1 trillion investment in infrastructure” through a combination of public and private investment. Trump chose his words carefully on that last part — it isn’t clear how much of the money would actually come from taxpayers — but Trump’s advisers have said there would be at least some direct government spending in the plan.

Trump talked often about infrastructure on the campaign trail, and at one point it looked like it could be near the top of his legislative wish list. Infrastructure is the rare issue where Democrats, Republicans and policy wonks all agree with one another (at least until they need to iron out the details or figure out how to pay for it). But the further we get from Election Day, the further the issue seems to slip down the priority list. Trump has yet to lay out details of his infrastructure plan, and the news site Axios last week reported that Congress may wait until 2018 to act on the issue. Trump on Tuesday night seemed determined to put it back on the agenda.

The economy

“Tonight, as I outline the next steps we must take as a country, we must honestly acknowledge the circumstances we inherited. Ninety-four million Americans are out of the labor force. Over 43 million people are now living in poverty. And over 43 million Americans are on food stamps.”

In recent weeks, Trump has argued that he “inherited a mess” from Obama. He repeated that sentiment, though not the exact line, Tuesday night, going on to say that the economy has undergone “the worst financial recovery in 65 years” despite mountains of new government debt.

The 94 million figure is deeply misleading; it includes retirees, stay-at-home parents, the disabled and others who can’t or don’t want to work. Some of the other numbers lack context — the number of people in poverty fell dramatically in the most recent year of data, for example, and the national debt ballooned largely because of the financial crisis and the wars in Iraq and Afghanistan, all of which began before Obama took office.

Still, most of the problems Trump pointed to here and elsewhere in the speech are real. It’s true that fewer working-age Americans have jobs and that poverty is higher than before the 2008-09 recession. It’s true that the debt is rising faster than many economists, particularly on the right, consider sustainable. It’s true that manufacturing jobs are disappearing, wages have risen slowly and overall economic growth has been disappointing.

For Trump to say he inherited a mess, however, is to forget what Obama inherited: not a mess, but a full-blown catastrophe in which the U.S. was hemorrhaging hundreds of thousands of jobs per month. Compared to that, the economy that Trump is taking over is positively booming. Obama, as I wrote last year, successfully stopped the economic bleeding; what he didn’t do was address the underlying illnesses of slow growth, rising inequality and declining economic dynamism. Unfortunately Trump, for all his talk of the economy, hasn’t proposed policies that are likely to address most of those issues, either.

Ben Casselman is a senior editor and the chief economics writer for FiveThirtyEight. @bencasselman